By
James L. Tyson, Staff writer of The Christian Science Monitor /
August 30, 1988

Peking

Overlooking political and trade disputes, China and Japan have pledged to begin a new era of harmonious ties in which Tokyo is offering more capital for Peking's bold drive to build its economy. The arrangement matches the world's richest creditor nation with the most populous developing country and centers on a Japanese promise of $6.1 billion for development projects in China for 1990-95.

Both Japanese Prime Minister Noboru Takeshita and senior Chinese leader Deng Xiaoping voiced support last week for what Mr. Deng called ``a new type of relationship.''

The amicability of Mr. Takeshita's six-day visit shows that the two countries recognize that their economic compatibility outweighs persistent wrangles which have vexed the relationship in the 16 years since normalization, according to a Japanese official.

In recent years Peking has denounced Japan's alleged lack of remorse and candor over its aggression during World War II, noting visits of Japanese officials to war memorials, the content of Japanese history textbooks, and the outspokenness of right-wing groups in Japan. The two countries skirted these issues in their public comments over Takeshita's meetings.

Also, both sides agreed that they would not allow the relationship to be further upset by the decision of a Japanese court to award ownership of a student dormitory in Kyoto to Taiwan rather than the mainland, Japanese officials say.

In the only sign of a persistent irritant, Deng urged Takeshita to goad small- and medium-sized Japanese enterprises to boost business investment in China and accelerate the transfer of Japanese technology.

``This is more important than providing loans,'' Deng said, according to the official newspaper China Daily.

Chinese officials have repeatedly criticized Japan for not investing at a level commensurate with its status as China's No. 1 source of imports.

They note that Japanese businesses have committed $1.86 billion to China since 1979, or just 10 percent of total foreign investment, compared to investment by US manufacturers of $2.76 billion during the same period.

However, Takeshita said at a press conference Saturday that the signing of an investment protection law during his visit ``marks the juncture to a new beginning for the promotion of Japanese investment in China.''

In theory, the new law gives Japanese companies the same tax and foreign exchange treatment and access to markets, materials, transportation, and communications as Chinese companies. It also grants Tokyo an official role in resolving disputes over investment projects.

Friction over trade was also conspicuously absent in the talks, according to the Japanese official. China has reversed a deficit in bilateral trade with Japan that peaked at $5 billion in 1985 by imposing high duties on Japanese consumer goods. In the first six months of this year China enjoyed a $500 million surplus in trade with Japan.

Referring to talks over international issues, Takeshita praised China for forming unofficial trade and sports ties with South Korea.

China has staunchly supported North Korea in its cold war with the South since supporting Pyongyang in the Korean war. However, last year it engaged in indirect trade totaling some $2 billion with the South, three times the figure of its trade with the North. It also plans to participate next month in the Olympic Games in Seoul.

Such contact ``will help ease the tension on the Korean Peninsula and we welcome such ties, however informal,'' Takeshita said.

China plans to use the loans from Japan to fund 40 development projects, including roads, steel plants, railways, and harbors. The five-year funding scheme exceeds the $5.8 billion Japan has provided to China in the past decade. Japan provides more than 80 percent of China's external credit.